Lenders have slashed mortgage rates in what could be the last round of cuts ahead of the Budget.

On Monday, Barclays dropped its rates for a five-year fixed mortgage by 0.3 percentage points to 4.35pc. Halifax and Skipton Building Society also cut rates on several of their mortgages. It comes after several lenders including HSBC, Santander, TSB and NatWest lowered rates last week.

David Hollingworth, of L&C Mortgages, said banks were locked in a price war amid a slump in the property market ahead of the Budget.

Figures from Rightmove show that the average asking price has fallen by £6,589, or 1.8pc, so far in November.

It marks the largest decline during that month since 2012. Many prospective buyers are holding off amid speculation that Rachel Reeves could unveil a property tax raid in the Budget next week.

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Mortgage prices are also coming down after a sustained fall in interest rates.

Interest rate swaps, financial products that are used to price fixed-rate mortgages, have also fallen consistently over the past six months as the Bank of England has lowered the base rate.

Two-year swaps, which are more closely linked to near-term interest rate expectations, fell as low as 3.57pc on Monday, down from 3.83pc in May.

Mr Hollingworth said: “The hope will be that we’ll see a [interest rate] cut in December, and that we’ll see further cuts feed through, albeit gradually, next year as well. But of course inflation data, if it’s worse than anticipated, it can put the brakes on that kind of positivity.”

Policies announced in the Budget are also likely to feed through to mortgage rates.

Mr Hollingworth said: “If there’s something that they don’t like the look of, then of course those rates could push up, and that could feed into lender pricing.”

The Chancellor is expected to announce changes to property taxes in next week’s Budget after abandoning plans to increase income tax last Friday.

Paul Johnson, the former director of the Institute of Fiscal Studies, told Times Radio he was worried about the impact of this strategy on the economy.

He told Times Radio: “I think we might also get a rather mouldy smorgasbord of rather unappetising tidbits which just simply involve raising a whole bunch of taxes in ways that might in the end be rather economically damaging.”

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